What Is A Tax Audit and How Does it Work?
If you feel like the IRS is hounding you for money, it might be time to face the music and get a tax audit. What does a tax audit entail? What is a Tax Audit? What can an auditor learn from your records? Don’t worry, we have all the answers you’re looking for in this article!
What is a Tax Audit?
A tax audit is an investigation by the IRS of taxpayers’ tax returns to ensure that they have filed their taxes correctly. The purpose of the audit is to ensure that the taxpayer has paid all of the taxes due and that any errors on their tax return have been corrected. The audit can also be used to determine whether the taxpayer may have received any benefits from the government that was not supposed to be given. Tax audits can be conducted in person, through the mail, or electronic methods.
How does a tax audit work?
A tax audit is a review of your tax returns by the IRS. This can include looking for mistakes or inconsistencies and helping you to correct them if there are any. The IRS may also ask for additional information, such as records of any business activities.
Why would someone be audited?
A tax audit is a formal examination of a taxpayer’s tax return by an auditor employed by the IRS. The objective of the audit is to ensure that the taxpayer has reported all income and deductions correctly on their return. If the audit finds errors, the IRS may demand that the taxpayer pay back any overpaid taxes or penalties, or they may ask for changes to their return. Audits can be expensive for taxpayers and can lead to significant financial penalties if mistakes are not corrected. However, taxpayers who are audited rarely face criminal prosecution or jail time as a result of the audit.
How long does it take for an audit to be completed?
A tax audit can take anywhere from a few days to several months, depending on the complexity of the audit.
What are the next steps after a tax audit has been completed?
There are a few next steps after a tax audit has been completed. First, the taxpayer will receive a letter from the IRS indicating that an audit has been completed. Second, the taxpayer will need to submit any amended returns or transcripts to the IRS. Third, the taxpayer must pay any outstanding taxes and penalties that were discovered during the audit. Finally, the taxpayer may be required to file an Offer in Compromise (OIC) if they disagree with the results of the audit.
Conclusion
A tax audit is a process by which the IRS (Internal Revenue Service) reviews your tax returns to determine if you have complied with all of the laws and regulations governing federal income taxation. If the IRS determines that you have not complied with any of these provisions, it may impose penalties upon you, including monetary fines and imprisonment.
